Edge of the Blade Maker A tractor blade maker is producing its own steel to cut costs and gain globa
SUNRINDER Rajpal is busy ramping up production at his factory located just across GT Road, on the Chandigarh-Delhi highway. He is setting up an oxygen plant to spruce up steel production at the unit. But wait, Rajpal isn't a steel producer. He is one of the biggest producers of disc blades (tractor blades) in the world. However he set up a steel furnace, a rolling mill and an oxygen plant at his unit to produce his own allow steel, instead of sourcing the alloy from the Steel Authority of India Ltd, because he could thereby cut input costs by as much as 15%. "With one go, I became so competitive in the global market that some of my competitors in Brazil and Spain have been forced to shut shop. Their clients and many farm equipment retailers in the US and South Africa have started coming to me directly," says Rajpal. His company Karnal Agriculture Industries Ltd (KAIL), situated across the GT Road on the Chandigarh-Delhi highway, has recently ramped up production of tractor blades from 2 million pieces to 5 million pieces. He is already making 4 million pieces and is hoping to touch optimum capacity in about three months. KAIL's turnover which was barely Rs 35 crore in 2003-04 would jump to Rs 200 crore next year. "We are revising all our numbers," Rajpal beams, adding he has already engaged ICICI Bank to find KAIL a private equity investor which could pick up a 15% stake in the company for about Rs 70 crore. "After that, we will go for an IPO." Much of the company's optimism comes from the fact that there is a growing demand for tractor blades worldwide as more and more civilisations take to organic farming. "In organic farming you require deeper ploughing. So, the need for strong blades is on the rise," he says. What's more, tractor blades have to replaced once every year. In deserts, you have to replace it every 6 months. Which means, the more the number of tractors, the more the demand for the blades. Rajpal also points to the fact that the old tractor blades can also be recycled to produce more steel and hence more blades—cheaper. The stronger rupee hasn't impacted KAIL's business because the weakening dollar has impacted his global competitors many more times. That is why in the past six months, KAIL has started getting orders that would normally go to Brazilian companies. It is also getting orders from OEMs of tractor companies and also to farm equipment retailers from south east Asia, the US, Africa and Europe. Demand from the US alone has doubled. Demand in the domestic market is also on the rise. His clients in the country include the likes of Mahindra & Mahindra and Punjab Tractors. So gung ho he is about business prospects, Rajpal is now planning to set up a field plant with different varieties of soil to test the blades. "Different countries have different climatic conditions and hence require different kind of blades. The soil in India will be different from that in Australia. So we plan to make an artificial field plant where we can have different kinds of soil. There, we can till and test the blades and will enable us to deliver more quality products," he adds. The tills are indeed ringing